What is Debt Consolidation?
Debt consolidation is defined as combining multiple debts such as credit card bills into a single monthly payment loan, usually in the form of a personal loan which may be lower in interest. In simple terms, it is using one loan to pay off multiple existing loans or credit cards so that the repayment process will be simplified. This helps the borrower to efficiently keep track of their monthly repayments when it’s rolled into one.
How Does Debt Consolidation Work?
Typically when consolidating a debt, a borrower applies for a loan in the form of a personal loan or a balance transfer credit card through banks or another financial institution. When a borrower takes up a debt consolidation loan, the lender may pay off the borrower’s multiple debts directly and bill the borrower by monthly repayments.
Alternatively, the borrower would get the loan in the form of cash and pay off the outstanding balances. Banks may offer this service by means of a balance transfer; which means transferring all the outstanding credit card debts from other banks and consolidating them into a repayment process for the borrower.
Debt consolidation is attractive in the sense it helps to lower the amount a borrower needs to pay each month, along with a lower interest. This is accomplished by extending the loan period of the loans consolidated, making them more manageable and affordable for the borrower.
Why Should I Consolidate My Debt?
Consolidating your debts help give you a clearer picture of your financial health and shows what you owe. With multiple loans to keep track of, it is easy to sometimes overlook the bills and forget to make your repayments. Missing out on your monthly repayments often cost you extra interest.
Those late interest, when piled up really adds to your debts. If you are easily overwhelmed with bills and find it hard to manage multiple accounts, debt consolidation is for you.
To fully take advantage of a debt consolidation personal loan, research on financial institutions that offer a much lower interest rate than others in the market. The lowest interest rate loans range from 4.8% to 8% in the market. Let’s look at the top 10 loan consolidation institutions in Malaysia.
Best Debt Consolidation Companies in Malaysia
1. Alliance CashFirst Personal Loan
Alliance CashFirst Personal Loan offers a fixed rate of 4.99% p.a for 1-2 years tenure and 6.99% p.a for 3-4 years tenure. This personal loan helps consolidate commitments from credit card, personal loan, home loan, or car loan into one single monthly repayment. Approval takes 24 hours.
- Minimum loan amount RM 5,000
- Maximum loan amount RM 150,000
- No early settlement is allowed.
- Minimum monthly salary RM 3,000
- Age requirement 21-60 years old
2. Standard Chartered Cash One
Standard Chartered Cash One is a personal loan that works hard for you.
It offers borrowers financial flexibility: Each time you make your monthly loan repayment, it rewards you by converting the paid principal amount into a credit card limit for you to spend. It also offers a competitive rate of 0.583% per month depending on loan amount and tenure.
- Flexible Repayment Tenure from 12 – 84 months
- Lifetime annual fee waiver
- 100% disbursement with low monthly installments.
- No hidden fees and charges
3. HSBC Amanah Personal Financing-i
HSBC Amanah Personal Financing-i is a very flexible personal loan. Paid principal amount can be withdrawn again in case of emergency. There are no fixed installment obligations. You only need to service the monthly interest. The application process is also fast and hassle free. HSBC Amanah Personal Financing-I also provides financing up to RM 150,000.
- Repayment as low as RM 134
- Payment period up to 7 years
- Instant cash disbursement into your financing account with HSBC Amanda’s upon approval
- Flat rate from 10.5% per annum
4. Ambank Personal Financing-i
AmBank Personal Financing-i is a suitable personal loan to finance unplanned events, and when you have maxed out on your credit cards. It gives you a rebate on early settlement and requires no advanced installments.
- No guarantor & collateral required
- No monthly membership fee
- Takaful coverage (optional)
5. Hong Leong Personal loan/ financing- i consolidation
Hong Leong Personal loan/Financing-i consolidation allows you to pay off outstanding balances from 3.88% p.a.
- Helps consolidate multiple payments into a sing,e installment and helps you save on interest.
- Affordable installments for tenures from 2 to 5 years.
6. Maybank Personal Financing-i
Maybank personal loan: Islamic Personal Financing-I (MIPF-I)
- Fixed monthly installments with a tenure of 2 years to 6 years.
- Gives you a financing amount of RM 5000 to RM 100,000.
- Low monthly installments from RM 102.78 per month.
- Fast approval with no processing fee
7. RHB Personal Financing-i
RHB Personal Financing-i helps ease your commitments by giving you the flexibility you need. With financing up to RM200,000 for consolidated debt, it is one of the highest in the market.
- It also provides a long financing tenure of up to 10 years.
- Enjoy lower profit rate via principal reducing balance method
- Have a curated scheme for civil sector, pensioners, and private sector.
8. Bank Islam Personal Financing -i
Bank Islam offers a personal financing loan with a minimum amount of RM 10,000 and RM 300,000 maximum.
- No guarantor needed
- No processing fee
- Flexible financing tenure
- Competitive rate upon request
9. Berjaya Loan 2U
A reputable licensed money lending company with over 20 years of operation in Malaysia. Payment period of 1 month to 60 months.
- Fast approval for credit card consolidation
- With low-interest rate of 1.5%.
Do I qualify for a debt consolidation personal loan?
With many debt consolidation loans in Malaysia to consider, you may ask how do I know if I qualify for a debt consolidation personal loan? Most financial institutions and banks have some minimum requirements that you need to fulfill before applying for a debt consolidation loan.
A basic requirement is you need to be a Malaysian citizen or permanent resident. Between the age of 21 and 60 years old. You will need to have a minimum monthly gross income of RM 3,000. Proof of identification, income, and residence must be submitted together for approval of the personal loan.
How much can I borrow with a debt consolidation personal loan?
How much can one borrow with a debt consolidation personal loan? For debt consolidation in Malaysia, many banks and financial institutions set a minimum of RM 1,000 to RM 250,000 depending on the borrower’s credit history or rating.
There is also an upper limit set by banks and other financial institutions on how much one can borrow. The limit is usually in the range of three to four times the amount of their current salary. This limit is to ensure you don’t overextend your finances.
Is it worth it?
With many debt consolidation loans in Malaysia to choose from, is it worth consolidating your debts? Debt consolidation can lower your loan payments if you are able to get a lower rate than all of the individual interests combined.
It will help you to reduce your total debt and reorganize all your debts in one so that you can pay it off faster. A debt consolidation is also feasible for individuals who have a manageable amount of debt and just want to organize all the current existing multiple debts into one.
When debt consolidation isn’t worth it
Debt consolidation isn’t for individuals who don’t have control over their spending. Consolidation doesn’t help people with excessive spending habits. Debt consolidation would only help to reduce the current monthly debt repayments, but it won’t curb the future money spending of the borrower who can’t control their spending habits. If anything it will pile up on the debts, and giving the borrower a false sense that they have extra money to spend now that their debts have been reduced.
Debt consolidation in Malaysia allows you to be more in control of your finances if the idea of multiple debts and bills overwhelms you. With the best debt consolidation banks and institutions in Malaysia, you can get the best deal that meets your personal financial goals and find a customized scheme that suits your financial standing.
Debt consolidation can put your finance roadmap back on track and help you to make a better financial decision for your future like saving to buy a house or investing to multiply your income. Get a quote today from these reputable and qualified banks and financial institutions/consultant firms.